Home Loans

Before you apply for a debt consolidation loan, try resolving your own debt first. The best way to start climbing out the debt trap is stop increasing your debt and start paying it off. You just need to know how to do this.

Step 1: Know how much you owe
First thing you need to do, is know what you’re up against. Make a list of all the accounts you have and the outstanding amounts and the monthly payments. You can use this information to determine how long it will take you to pay off. Also get a copy of your credit report, which lists your payment behaviour. If there are any judgements against your name, you know which creditor to give more attention too.

Step 2: Reduce your interest
You can figure out which of your accounts are costing you more in interest merely by asking what the interest is on your overdraft. Move your higher interest facilities into the lower interest ones to reduce this amount.

Step 3: Move your debt
If you have high interest credit cards, apply for a balance transfer credit card which moves what you owe on the one account into another account with lower interest. These accounts only carry lower interest for the first few months, so make sure you plan well enough in advance to pay up this debt before the interest increases.

Step 4: Act now
Don’t wait to long to take action on your debt, even if it means applying for a debt consolidation loan. The problem with debt is that it likes more debt and accumulates very quickly over a short period of time. If you can see signs of struggle, take these steps now.

A debt consolidation loan puts into practice the above debt saving techniques by moving all your debt into a low-interest mortgage or home loan account. It can be paid off with your property, reduces your interest and allows for extra payments to be made into the account. If you are stuck in the debt trap, it’s worth considering.